The error messages that appear are due to power limitation on bus-powered hubs as it is not recommended to connect two bus-powered hubs in a cascaded manner. The reason for this is that the maximum power available on each port of a bus-powered hub is 100mA, but when you connect another hub to a downstream port of the first hub, 100mA is not sufficient to power the second hub and its downstream ports. Please refer to section 2.2 of the App Note for a more detailed explanation- https://www.cypress.com/file/122726/download
As you mentioned, setting the powering mode to self-powered using the SELFPWR pins will fix the issue as both the hubs wont be drawing any power from the host downstream port.
Please also note that the EEPROM configuration maximum power value is that required by the hub only i.e. what will appear in the hub configuration descriptor and wont include the power requirement of the downstream devices.
Thanks for the feedback. I will make those changes and report back